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A fact of life in business is that most large companies acquire other companies. Sometimes these deals are aimed at taking out a competitor, like when Starbucks bought Seattle’s Best. Sometimes they add complimentary offerings, like when Sears bought Land’s End. And Sometimes they don’t really make sense, like when Daimler Benz bought Chryslers. Often these deals are looked at financially, but there isn’t always a thorough exploration of the impact on the brand.
Since Apple has a war chest of $60 billion, there’s been speculation over whether the company should make more acquisitions. The company does have a history of buying other businesses but they are usually smaller deals aimed at building technological capacity. In 2010, Apple bought Quattro Wireless, Intrinsity, Siri and Poly9. Don’t be embarrassed if you never heard of these, most people haven’t. The question I like to think about is who Apple might buy if they wanted to do a major deal, and how might it affect the brand?
If you’d like to play along, please add your suggestion in the “comments” section.
Here are two to get you started:
Apple + Nikon:
The famous photography company is valued at just under $8 billion, well within Apple’s price range. The brand is know for making superb products for professionals and consumers – just like Apple, and Nikon focuses on a target audience of creative people – just like Apple. There are also some notable synergies. Apple offers two software packages for editing photography: iPhoto and Aperture. Both are superior to Nikon’s own software. Apple also makes the leading video editing software: Final Cut. Nikon’s newest cameras also shoot video. Apple’s latest hardware, including the iPhone, iPod, iPad and Mac computers, all have built in cameras. Unfortunately these cameras aren’t very good. Imagine dropping Nikon cameras into these devices? Overall, I think an Apple/Nikon deal has a lot to offer.
Apple + Nintendo
This is a pricier deal – Nintedo has a market cap of about $30 billion – but this is still well within Apple’s grasp. Apple’s has $60 billion in cash and a market cap of over $300 billion, so if both companies wanted to do the deal it would be easy to pull off. The value? Well both companies are known for innovative, elegant products that challenge industry conventions. When gaming hardware companies were all focused on adolescent boys, Nintendo changed the industry by targeted everyone else with their incredibly popular Wii. And Apple has recently started to wake up to the potential of gaming. It’s AppStore has become one of the largest gaming outlets in the industry. Imagine AppStore for Wii and DS? Seems like an interesting fit.
With both Nikon and Nintendo, I think there’s an ideological harmony, but maybe you disagree. I’d like to hear your opinions and your suggestions for an ideal Apple mash-up. Just use the comment field to join in on the conversation. And if you’re a marketing professor, ask your students what they think and let me know.
This week, the business news was dominated by an announcement that Apple’s Steve Jobs has temporarily stepped down from the role of acting CEO to take a medical leave of absence. This is not his first medical sabbatical; Jobs has struggled with health issues for years, but the timing of the announcement came just one day before Apple, Inc. posted record-breaking revenues and profits, blowing past all analyst estimates by a wide margin.
The company now has revenues of more than $70 billion, tenfold its size when Jobs returned to the company in 1997. It has the most desirable products in most of its categories and a stock value of more than $300 billion.
Certainly Jobs has proven to be a brilliant leader with an uncanny ability to identify opportunities and respond with beautifully executed products. So the question is, can Apple continue on this path once Jobs is gone? Does Apple’s success surface solely from the perfect-pitch vision of its charismatic CEO or is there more at work here — a recipe that other leaders can follow?
To find our answers we can look at the performance of not one but two companies that Jobs has led in recent years, Apple and Pixar. Prior to Pixar’s 2006 sale to Disney, Steve Jobs was CEO of the motion picture studio while simultaneously running Apple, a remarkable feat, made even more remarkable by the fact that Pixar has the best track record of movie hits in Hollywood.
Over the years, I’ve followed both companies closely as a student of creativity and a teacher of successful brand practices. In my observations, I’ve seen more than individual mastery at work; I’ve noticed a simple, clear pattern of behavior that drives the success of both companies. I call it “The Jobs Doctrine.”
This doctrine can be used to understand how Apple became the most influential company in computers, phones, music and consumer electronics, and how Pixar simultaneously became one of the most influential company in movies. The Jobs Doctrine can also be put to work in any company, or used to make any career more successful.
So what is The Jobs Doctrine? It isn’t a lengthy set of rules or a mathematical formula. It is simply a disciplined approach to making things that delight us: Design fewer, simpler, greater things.
This recipe would seem so obvious that it’s barely worth mentioning; except that it is so little understood as the driving force of Jobs’s creativity and it is ignored by most corporations and individuals.
Let me demonstrate the doctrine in action. In 2010, a Businessweek survey named Apple the most innovative company in the world. While that may be no big surprise, most people associate innovation with constant change and multitudes of innovations. But Apple’s only major new product for the year was the iPad® and its last major new launch was the iPhone®, released in 2007, three years earlier. And to get to the launch of the iPod®, you have to go back to 2001. The point is that while Apple’s products are inarguably innovative, their releases are much less frequent than those of their competitors.
Take a quick look at the phone lines available from Samsung, Nokia or Motorola and you’ll see dozens of models with a wide variety of features. Even the more selective BlackBerry® brand has seven current models. Apple has only two: the new iPhone 4 and the earlier 3GS model. Both come only in black. They are currently only available from one carrier. The remarkable truth is that Apple gives consumers far fewer options than all of their major competitors, yet they sold an astonishing 16 million phones last quarter.
Think of the dilution of effort that a company experiences when it has dozens of phones to design, manufacture and support. Imagine the focus that would come if it decided to scrap their massive product lines to instead focus on designing a single, beautiful phone.
Jobs’s genius is that he fully understands the power of simplification. Go to the site of any competitor, from Microsoft, to Google, to HP, to Samsung, to Dell, and you’ll find they all have larger product lines and operate in more categories. Jobs presides over a company that prizes simplicity not only in its product line but in every feature that appears on every product. This allows the company time for meticulous development, which in turn leads to superior products. Jobs fundamentally believes that consumers are more interested in perfection than variety. And this is plainly evident at his other company, Pixar.
It seems unlikely that a technology mogul could succeed in the movie business but Jobs has been more than successful. He bought Pixar from Lucasfilm in 1986 for $10 million and sold the company to Disney in 2006 for $7.4 billion, 740 times what he paid for it. But what is more remarkable is that at the time Jobs sold Pixar to Disney, it had released only six movies.
As with Apple, Jobs revolutionized the animated film industry and made a killing doing it, following the identical recipe: design fewer, simpler, greater things. While the studio had made only six films at the time of its sale to Disney, each had been released to become number one at the box office. And the streak continues today, several years after Jobs stepped down as CEO. Its most recent film, Toy Story 3, was the highest-grossing animated film of all time.
The company continues to release fewer films than its competitors and it takes longer to perfect the films, but each of Pixar’s 11 movies is listed among the 50 highest-grossing animated films of all time and each has been acclaimed by critics.
So, the successes of Apple and Pixar are based more on a consistent formula than on individual genius. If this successful formula can continue in the absence of Steve Jobs, as it has with Pixar, than maybe we can all take lessons from it.
Let’s break down the formula a bit. I’ve used the term “design” because Jobs considers Apple to be in the design business. The evidence is printed on every package. The words “Designed by Apple in California” suggest a company that is concerned with design. But what if your business has nothing to do with design? Perhaps you should alter your perspective.
Webster’s has several definitions for design. They are:
• to create, fashion, execute or construct according to plan
• to conceive and plan out in the mind
• to have as a purpose
• to devise for a specific function or end
These definitions can apply to anything you do, whether it’s creating a research report that might change the direction of your company, perfecting a smoothie to make your restaurant famous, developing curriculum that will really get through to your students or building the finest website for adopting puppies that anyone’s ever seen. When you think of your role as that of a designer, rather than just someone who performs a routine job, it liberates you to build your project from scratch. You are not just executing or refining but are creating something new and better. But of course, you can only do this if you’re focused on a few things.
Designing fewer things may be hard to do if you’re an employee and someone else is setting your priorities, but it is still possible. Think of an advertising designer who must work on a dozen projects every week. If she looks at each project as equally promising, she will have her efforts divided with little hope of perfecting her work. But if she works to identify projects with the potential for greatness, she can focus most of her time on those and fight to get them approved. Many famous advertising creatives have built their reputations on a few, brilliant campaigns. So look for these opportunities, and concentrate your skills on making brilliant work.
One last piece of The Jobs Doctrine is the quest for simplicity. This is where Steve Jobs may be at his best. Almost everything he makes has fewer features than almost everything his competitors make. Fewer buttons. Fewer menus. Fewer cables and ports. Fewer options. Steve Jobs is absolutely fanatical about designing products with simplicity. There are trade-offs, of course. The MacBook Air® has no CD/DVD drive, but that allows it to be smaller, lighter and more elegant. The remote for Apple TV® has only a few buttons, but this eliminates confusion.
We live in a complex world, where simplicity is a rare commodity, and like all rare things, it is valued. Take a look at your work. Can you make it simpler? Can you eliminate confusion? Can you edit out the excess until only the essential ingredients are evident? If you’re like most people, the answer is “yes.” But it takes time. Mark Twain famously commented, “I didn’t have time to write a short letter, so I wrote a long one instead.” Most of us fall into this trap. We would make things simpler, but we just don’t have time for the needed refinement. And this comes back to doing fewer things.
One last point about the doctrine: Designing fewer, simpler, greater things doesn’t just make the products better, it makes them easier to sell. Jobs is considered a masterful showman, and he is. We can all learn from watching his keynote presentations, but what enables him to be so persuasive is two things: He has only a few things to talk about, and each has been refined to make them better than the competition. We all know the feeling of going into a meeting with great work in our hands. We almost can’t wait to show it off. Our excitement and confidence are palpable. Selling a few great ideas is considerably easier than selling a lot of mediocre ideas. We have the time to romance each idea and we gain power from knowing the work is good.
Steve Jobs will be remembered as a remarkable individual who reshaped every industry he entered. The fact that much of that genius has been concentrated on designing and perfecting a small number of things does not diminish his accomplishments; it is the source of them. Applying this formula to our own efforts may not make us a billionaire or a celebrity, but it will make our work stronger and our efforts more purposeful, and that’s a good idea.
Spend much time reading today’s headlines and you’ll get the impression that big businesses are just decaying hulks of greed and corruption. But a new article in Fortune reminds us that many corporations are not only surviving, but earning the admiration of their peers.
The list of the world’s most admired companies includes innovative consumer brands like Disney, Apple, Google and Southwest Airlines, along with respected holding companies like Berkshire Hathaway and Procter & Gamble. Skim through the top 50 and you’ll be reminded there are still leaders in this world.
Brand-builders should note there are two key qualities exhibited by most of the companies on the list: The vision to avoid the crowd and the wisdom to build long-term stability. As always, individuality and predictability are the building blocks for great brands.
The Top 20:
2 Berkshire Hathaway
3 Toyota Motor
5 Johnson & Johnson
6 Procter & Gamble
7* Southwest Airlines
9 General Electric
11 Wal-Mart Stores
13 Walt Disney
14 Wells Fargo
15 Goldman Sachs Group
20 J.P. Morgan Chase
This week brought a handful of media calls asking about brands in the news. “Does Super Bowl advertising make economic sense?” “How can Detroit Automakers restore their brand?” “How will Steve Jobs’ leave of absence to address a serious illness affect Apple’s Brand?”
That last one got to me. A human being says he is too sick to work, and all the media can ask about is what the affect will be on the stock price.
Steve Jobs gave birth to Apple in 1976 and restored it from near-certain death in 1987. He requested no salary upon his return and held no Apple stock. He didn’t do it for economic gain. He was crazy enough to think he could change the world – and he did.
He revolutionized the computer industry, the music industry, the phone industry and the animated movie industry. He brought tools for creativity to everyone, with software for editing video and photography, words and music. He built marketplaces where musicians and programmers could bypass intermediaries to sell their work. Along the way, he built a small army of brilliant and creative thinkers who go to work every day thinking differently.
So for a little while, this army will carry the torch – as they should. They will let Steve Jobs rest and recover – as we should.
Be well Mr. Jobs. We wish you the power to be your best.